With the race being opened by the United States by trading government debt for monetary liquidity, governments all around the world cannot but react with their own programs of state debt to attract the cautious investors.

Anything else would mean prosperity in the United States at the expense of other economies. Even the German government, which was planning on its first stable budget in centuries, gave up its plan and happily jumped aboard the wagon.

This exposes the prisoners dilemma type of problem of a cautious spending policy by government: If one big government drops out and starts spending, the others have to follow suit.

News at 11: US government buys up liquidity abroad, exporting the banking crisis to other countries and bringing the stock markets down.

The 700bn bailout money has to come from somewhere: It is 700bn less that would partly be in the stock markets of the world. Also when the US issues additional bonds, a lower price means a higher return, and that is what investors are asking for when suddenly 700bn worth of bonds are issued.

Even if these bonds have not all been issued yet, the markets think ahead and expect lower prices. So it is not a surprise the stock markets go down when the governments start their rescue plans.

As a result of the bail out, the banks as beneficaries should recover on the stockmarkets while the rest of the economy slows down.

There is also the question that alternatives have not been considered, for example instead of buying the poisoned subprime loans at the benefit of the banks, house buyers could have been the benificaries, bringing housing prices up so that the loans and mortgages are worth something again.